Be Wise and Don't Waste Your Money

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Four Ways to Save

Four areas where you can save...starting today. (Published Wednesday, March 3, 2010)

The first place where people blow their Benjamins is where the average family spends more than a hundred bucks every week – the grocery store.

Consumer Reports recommends buying generic, in every case. Many people say they can’t tell the difference in taste between a generic brand and a name brand, but the difference in price is eye-popping. On average, CR found shoppers saved 30 percent by switching to generic brand products.

And while you’re at the store, think of how much money you won’t be pouring down the drain if you skip buying bottled water and opt for tap. You can bottle up $600 over a year.

Another place where people waste money -- low insurance deductibles. The lower your deductible, the more you pay up front. You can save $100 to $500 by raising your deductible from $500 to $1,000.

“In a few years, you recover that $500 that you’ve increased,” said State Farm's Mike Hickey.

Another major money-sapper is keeping a high balance on your credit card, but a low balance in your bank account. Say you have $5,000 in the bank earning .02 percent interest, and at the same time, you’re carrying a $5,000 credit card balance while paying 20 percent interest. The cost of carrying the debt is 100 times what you’re earning in interest. For every dollar you earn by guarding money in savings, you’re paying $100 in finance charges to the credit card company.

“If you left that $5,000 in the bank, at the end of five years, you’d have $50 in interest. And you would’ve paid out $2,800 in interest (to the credit card company). So how dumb is that?”

One last smart money tip – bypass the bookstore.

The average adult fiction book costs $16. If you buy one book a month, that’s $192 every year. Borrowing books from the library and from friends is free, and promotes good karma. We think.

Of course, anyone who’s ever poured their blood, sweat, and tears into writing a book will tell you, $16 is a bargain. Better to skip your store-bought latte once a month.